Jamie Beyer t/as Leisure Pools & Spas Newcastle v Palazzi

NCAT Appeal Panel|2020-02-17

REASONS FOR DECISION

The appellant (the builder) appeals against a decision by which he was required to pay the respondents (the home owners) the sum of $79,826.
The dispute between the parties arose from the installation by the builder of a swimming pool at the home owners' premises between November 2012 and March 2013. The home owners asserted that the work carried out by the builder was defective in breach of the statutory warranties arising pursuant to section 18B of the Home Building Act 1989 (NSW) (HBA).
The home owners asserted that the method of construction of the pool and associated paving works had caused movement due to subsidence of the pool deck and north-west corner of the pool and had led to a vertical crack in the north west corner of the pool starting at coping tile level. During the course of construction of the swimming pool the home owners had engaged a third party builder to construct a retaining wall in close proximity to the pool on its northern and western sides. The major issue between the parties was whether the movement of the pool was due to inadequate construction and engineering detail of the retaining wall or whether the damage to the pool arose from defective building work by the builder.

The Decision of the Tribunal

The Tribunal determined (at [98]) that: "inadequate piering of the concrete slab constructed by the [builder] was a defect, because the work was not performed with due care and skill considering the amount of soil on site and the role of the piering in stabilising the concrete deck slab in its proximity to the pool shell."

The nature of the appeal

The builder's rights of appeal are limited by s 80(2)(b) of the Civil and Administrative Tribunal Act 2013 (NSW) ("the NCAT Act"), which provides that an appeal against a decision other than an interlocutory decision of the Tribunal may be made: As of right on any question of law, or with the leave of the Appeal Panel, on any other ground.
As this appeal is brought from a decision of the Consumer and Commercial Division of the Tribunal, by virtue of clause 12(1) of schedule 4 of the NCAT Act, leave may only be granted under s 80(2)(b): If the Appeal Panel is satisfied the appellant may have suffered a substantial miscarriage of justice because: (a) the decision of the Tribunal under appeal was not fair and equitable, or (b) the decision of the Tribunal under appeal was against the weight of evidence, or (c) significant new evidence has arisen (being evidence that was not reasonably available at the time the proceedings under appeal were being dealt with).
In Collins v Urban [2014] NSWCATAP 17 the meaning of "substantial miscarriage of justice" was summarized at [71] and [79] as follows: [71] [I]t can be seen that the concept of a substantial miscarriage of justice refers to a failure in the way a matter was conducted or decided which deprived the appellant of a chance that was fairly open of achieving a better outcome than occurred… … [79] In order to show that a party has been deprived of a "significant possibility" or a "chance which was fairly open" of achieving a different and more favourable result . . . it will be generally be necessary for the party to explain what its case would have been and show that it was fairly arguable. If the party fails to do this, even if there has been a denial of procedural fairness, the Appeal Panel may conclude that it is not satisfied that any substantial miscarriage of justice may have occurred."

The Notice of Appeal

The builder's Notice of Appeal identified two substantial grounds of appeal.
The first ground was that: "the appellant was denied procedural fairness in that they were not given an adjournment when they should have been, nor given a reasonable opportunity to present their case".
Although the original Notice of Appeal identified eleven bases upon which the builder alleged he had been denied procedural fairness, Mr Slattery, who appeared for the builder at the hearing before the Appeal Panel, pressed only four of those bases, that is (d) to (g), as follows: (d) further compounding this and/or in the alternative, the Appellant was not served with the Respondent's Expert's First Report of Dr [sic] Savage prior to the Hearing; (e) the Appellant was only served with the Report in Reply of Dr Savage and the Report of Mr Phillip's; (f) as the Appellant did not have the First Report of Dr Savage he was not able to provide that to his Expert for comment; (g) as the Appellant's Expert did not have the benefit of the First Report the Appellant's Expert Report missed an opportunity to address the findings of the First Report in the Appellant's Expert evidence.
The second ground of appeal was: 2. The Member made a decision which it did not have the jurisdiction to make or upon which there was no evidence to decide that he had the jurisdiction to make the decision because: (a) There was no evidence considered by and/or sufficient to satisfy and/or before the Member to make a finding that the defect was a major defect; and (b) therefore the limitation period for the statutory warranty was not 6 years but 2 years and as such the limitation period had expired at the time of the Hearing.
The builder also sought leave to appeal on the basis that the decision under appeal was not fair and equitable. The matters relied upon by the builder in support of his application for leave to appeal are those matters raised by the builder as questions of law and we will address the builder's application for leave to appeal in conjunction with our consideration of his grounds of appeal.

Ground 1 - denial of procedural fairness

As noted above, in reaching his conclusion concerning whether the damage to the pool was a consequence of defective work on the part of the builder, the Senior Member relied upon the evidence of Mr Savage. The evidence before the Senior Member included two reports from Mr Savage, an initial report dated February 2019 and a supplementary engineer's report dated 27 June 2019 responding to the report of Mr Skelton filed by the builder.
The essential gravamen of the grounds of appeal maintained by the builder in respect of the alleged denial of procedural fairness is that the builder did not receive a copy of Mr Savage's February 2019 report prior to the hearing.
The builder did not file any evidence to establish that he had not received the first Savage report before the hearing or when he was provided with a copy of that report. The builder's written submissions in reply stated that "the Appellant received the First Report of Dr Savage during the course of the preparation of the tender bundle for the Appeal" but did not refer to evidence to support that proposition.
The appellant included, in the materials filed in support of his appeal, a transcript of the hearing before the Senior Member. Mr Slattery relied upon inferences he submitted should be drawn from the transcript.
The significant part of the transcript commences at page 4. The builder, who represented himself at the hearing before the Senior Member, referred to an engineer's report in the following terms "this is a new engineer which has made another report and I guess we haven't responded to this new report now by another engineer".
The Senior Member clarified that the builder was referring to the reply report of Mr Savage of 27 June 2019 and then recorded that there was an earlier report of Mr Savage dated February 2019 stating "so it's not a report from a different engineer. It's two reports from the same engineer."
The builder stated that he thought it was another engineer "because the name on the" and, after being interrupted by the Senior Member, stated "I thought there was an engineer that had moved and gone. He had gone from one place to another place."
At that point Mr Palazzi noted that there might be confusion because the home owners had originally got a report from Mr Phillips and stated that "the two reports which were submitted as part of the Tribunal process have been both from Mr Savage".
Mr Palazzi then commented that the builder's expert had responded to Mr Savage's report "not the previous one" to which the builder responded "this report, the latest report, I don't believe Skelton has responded to it." It is appropriate to note at this point that Mr Skelton's report did not refer to any other engineering report and did not explicitly respond to any such report.
The Senior Member asked the home owners when the reports of Mr Savage had been served and was informed that the first one was served in February and the second one was served on 28 June 2019.
The Senior Member then addressed the builder and pointed out that the first report had been served back in February and the second report was served on 28 June and referred to directions which were made in the proceedings on 29 March 2019 for the builder to file evidence upon which he intended to rely and for the home owners to file documents in reply. The builder did not take issue with the reference to the first report from Mr Savage having been served in February and did not assert that he had never received a copy of it before the hearing.
The Senior Member noted "I presume from these directions that there had already been service of the first expert report".
The builder then asserted that he hadn't been given the opportunity to reply to Mr Savage's report, noting that some of the statements made by Mr Savage in the reply report were, in his view, incorrect.
The following exchange then took place: Senior Member: Mr Beyer, have you read the reports of Mr Savage? The builder: Yes. Senior Member: Do you understand what the expert says? The builder: Yes. Yes, and mine too.
An exchange then took place between the Senior Member and the builder in which the builder indicated he was not ready to proceed as he had not had the opportunity to have his engineer respond to the statements in the second Savage report. The Senior Member pointed out that he had had the second report since 28 June 2019 and the hearing was taking place on 2 September 2019.
It emerged from subsequent discussion that the builder had apparently not understood that the hearing on 2 September 2019 was a final hearing and had not made arrangements for Mr Skelton to attend. The Senior Member responded by pointing out that the directions made by the Tribunal on the previous occasion and the notice of hearing for 2 September 2019 sent to the builder made it plain that the hearing of the matter would take place on 2 September.
The builder was then given an opportunity to telephone Mr Skelton to see if he could attend to give oral evidence. The builder reported to the Senior Member that Mr Skelton could not attend, and the Senior Member then indicated that he would not grant an adjournment of the hearing.
In his final decision the Senior Member gave reasons for refusing the adjournment application. The Senior Member firstly noted that the directions of the Tribunal had allowed the home owners to serve expert evidence in reply but that no directions had been made permitting the builder to serve any further expert evidence following the service of evidence in reply. Secondly, in respect of Mr Skelton's inability to attend, and the builder's failure to arrange his attendance because he claimed not to have understood that the hearing on 2 September was a final hearing, the Senior Member stated: "20 The first respondent's asserted confusion as to what would occur on 2 September 2019 and failure to prepare was self-inflicted and did not prevent him from having a reasonable opportunity to be heard and have his case considered at the hearing. The Tribunal is satisfied that the directions made by the Tribunal on 7 June 2019 (considered in the context of earlier directions made by the Tribunal at a previous directions hearing on 29 March 2019) are clear; and that the notice of hearing sent by the Tribunal dated 3 July 2019 is also clear. There was no reasonable basis established by the first respondent for his belief that the hearing on 2 September 2019 was merely a further directions hearing or that the Tribunal should exercise its discretion to adjourn the special fixture hearing on 2 September 2019."
Mr Slattery submitted that it was apparent from the exchanges summarised above that the builder had not received a copy of the first report of Mr Savage, and that the Senior Member: "ought to [have been] and probably was aware, that there was a real chance that the Appellant did not have adequate disclosure of the First Report of Dr Savage and that this would deprive the Appellant of adequately presenting his case or being heard."
Mr Slattery also submitted that "the Member was erroneously satisfied, that the Appellant had the benefit of adequate disclosure of the First Report of Dr Savage prior to the hearing."
Mr Slattery submitted that: "that error is a direct consequence of the Member failing to take reasonably practicable measures and/or follow the rules of natural justice to determine if such adequate disclosure had occurred."
Mr Slattery further submitted that: "the Member, in order to avoid the errors appealed ought [to have] … speci[fic]ally referred the appellant to the first report then shown to him and asked whether he had ever received it and read it."
Mr Slattery submitted that, as that had not occurred, the builder had been deprived of an opportunity to adequately present his case and be heard, as required by the NCAT Act, section 38(2).
Mr Goldsmith, who appeared for the home owners, asserted that the Savage report was included in a bundle of documents hand-delivered to the Tribunal on 27 February 2019.
Mr Goldsmith also submitted that, during the course of the hearing, Mrs Palazzi had stated that she had hand-delivered the folder to the builder's premises at Thornton. We note that that is not correct. It is clear from the transcript that Mrs Palazzi was referring to the second Savage report, not the first.
Mr Goldsmith relied upon the fact that the builder did not ask questions of Mr Palazzi to suggest that he had not received Mr Savage's first report. Mr Goldsmith also relied upon the fact that the builder had stated to the Tribunal Member that he had read the reports (plural) of Mr Savage. Mr Goldsmith submitted that: "to the extent that the appellant had not read Mr Savage's first report or provided a copy of it to Mr Skelton, the obvious inference is that that was simply due to the appellant's indifference to this claim."
Mr Goldsmith also submitted: "Mr Skelton's report does not even address the report from Mr Phillips, the obvious inference being that the appellant did not even bother to send Mr Phillips' report to him."
In written submissions in reply, Mr Slattery submitted that: "The matters the respondent raises to point towards the Appellant having had adequate disclosure of the first report of Dr Savage may be read having regard to the Appellant's clear treatment in the hearing of the second Report of Dr Savage as being from a 'new report now by another engineer'."
Mr Slattery submitted that: "At the hearing the appellant was labouring under the pretext [sic] that there were two not three reports, one from Thomas Mitchell & Associates [Mr Phillips] and another from Dr Savage. In this confusion for the Appellant, it would be expected that cross examination on these matters and the bringing of them to the attention of the Tribunal did not occur."
In oral submissions Mr Slattery submitted that, if there was a reasonable apprehension as to whether or not the builder was aware of the first report, the Senior Member ought to have taken "elaborate steps to investigate". Mr Slattery submitted that asking the question "Have you read the reports of Mr Savage?" was not sufficient given the risk of denial of procedural fairness in circumstances where the builder was an unrepresented litigant.
Mr Slattery referred to the Appeal Panel decision in Hanson v Metricon Homes Pty Ltd [2019] NSWCATAP 133 at [25]-[28], where the Appeal Panel stated: 25 The Tribunal's power to adjourn proceedings is conferred by s 51 of the NCAT Act. The principles applicable to applications for adjournment were discussed by the Appeal Panel in Armee v Brealey [2017] NSWCATAP 141, where the Appeal Panel said: 121. The Tribunal has the power to adjourn proceedings under s 51 of the Act. The power to adjourn is to be exercised according to the principles set out by the High Court in Expense Reduction Analysts Group Pty Ltd v Armstrong Strategic Management Pty Ltd [2013] HCA 46; (2013) 250 CLR 303, French CJ, Kiefel, Bell, Gageler and Keane JJ at 321 [51] (see O'Neill v T and I Engines Pty Ltd [2015] NSWCATAP 77 at [21]). Procedural fairness may be denied if a decision maker fails to adjourn proceedings where such a failure has the effect of depriving a person of adequately presenting the person's case: see Grozdanov v N&T Buildings Pty Ltd [2015] NSWCATAP 107 at [51]; Tiwari v Champion Homes Sales Pty Ltd [2016] NSWCATAP 73 at [21]-[22]. … 125. In O'Neill v T and I Engines Pty Ltd [2015] NSWCATAP 77 at [22], the Appeal Panel identified the following principles governing applications for an adjournment: (1) matters should almost always proceed on the date fixed for hearing, for the reasons enunciated above, (2) an application for an adjournment should be seen as the exceptional rather than the ordinary course; (3) where the adjournment is caused, at least in part, by the delay of the party seeking the adjournment, or noncompliance by that party with an extant order of the Tribunal, adequate explanation is called for, and its absence weighs heavily, and sometimes decisively against the grant of an adjournment. 26. The power to adjourn a hearing, as with all exercises of power under the NCAT Act or the procedural rules, must be exercised so as to seek to give effect to the guiding principle in s 36(1) of the NCAT Act, which is to facilitate the just, quick and cheap resolution of the real issues in the proceedings. 27. In Mesiha v Murrell [2017] NSWCATAP 1, the Appeal Panel summarised the statutory obligations of the Tribunal in the following terms: 36. Section 36(1) of the NCAT Act requires the Tribunal to give effect to the guiding principle which is "to facilitate the just, quick and cheap resolution of the real issues in the proceedings". The Tribunal is required to exercise the powers given to it in order to give effect to this principle: S36(2). The parties are under a duty to cooperate with the Tribunal to give effect to this principle "and, for that purpose, to participate in the processes of the Tribunal and comply with directions and orders of the Tribunal": S36(3). In doing so the "practice and procedure of the Tribunal should be implemented so as to facilitate the resolution of the issues between the parties in such a way that the costs to the parties and the Tribunal is proportionate to the importance and complexity of the subject-matter of the proceedings": s36(5). 37. Section 38 of the NCAT Act provides that: (1) while the Tribunal is not bound by the rules of evidence, it is to observe the rules of natural justice: s38(2); (2) the Tribunal is to act with as little formality as the circumstances of the case admit and according to equity, good conscience and the substantial merits of the case without regard to technicalities or legal forms: s38(4); (3) the Tribunal is to take such measures as are reasonably practicable to ensure that the parties to the proceedings: (a) understand the nature of the proceedings: s38(5)(a); (b) have a reasonable opportunity to be heard or otherwise have their submissions considered in the proceedings: s38(5)(c). 38. These requirements make clear that in giving effect to the guiding principle the Tribunal is to have regard to the interests of both parties as well as issues of proportionality which include issues of cost and the impact upon the Tribunal in meeting its obligations in respect of other applications which it is required to determine. 28. As noted by the Appeal Panel in O'Neill v T and I Engines Pty Ltd [2015] NSWCATAP 77 at [20], referring to the decision of the High Court in Expense Reduction Analysts Group Pty Ltd v Armstrong Strategic Management and Marketing Pty Limited [2013] HCA 46, Speed and efficiency, in the sense of minimum delay and expense, are essential to a just resolution of proceedings. The achievement of a just but timely and cost-effective resolution of a dispute has effects not only upon the parties to the dispute but upon the court and other litigants.
Mr Slattery laid particular significance on the comment of the Appeal Panel in Armee v Brealey [2017] NSWCATAP 141 at [121], set out in paragraph [25] of the Appeal Panel decision in Hanson v Metricon Homes, that "procedural fairness may be denied if a decision maker fails to adjourn proceedings if such a failure has the effect of depriving a person of adequately presenting the person's case."
Mr Slattery also relied upon the statement of Mason J in Kioa v West (1995) 159 CLR 550 at [585]: In this respect the expression "procedural fairness" more aptly conveys the notion of a flexible obligation to adopt fair procedures which are appropriate and adapted to the circumstances of the particular case. The statutory power must be exercised fairly, that is, in accordance with procedures that are fair to the individual considered in the light of the statutory requirements, the interests of the individual and the interests and purposes, whether public or private, which the statute seeks to advance or protect or permits to be taken into account as legitimate considerations (cf Salemi (No 2) ([(1977) 137 CLR 396] at p 451, per Jacobs J).
Mr Slattery submitted that "the adoption of fair procedures which are appropriate and adapted to the circumstances of the particular case" required the Senior Member in the circumstances of this case to ensure that the builder had received a copy of the first Savage report prior to the hearing.

Consideration - Ground 1

A denial of procedural fairness would be an error of law: Prendergast v Western Murray Irrigation Ltd [2014] NSWCATAP 69 at [13(4)].
Whilst we accept that it would have been a breach of procedural fairness for the Senior Member to rely, in reaching his conclusion, upon an expert report which had not been served upon the builder, and that this may have been the case even if the Senior Member was not aware that the report had not been served upon the builder, we are not able to draw the inference on the material before us that the first Savage report had not been served upon the builder in February 2019 or subsequently.
The builder's assertion on the appeal that he did not receive Mr Savage's first report before the hearing is at odds with his answer to the Senior Member that he had read Mr Savage's reports and with the absence of any express reference to this by him in a context, to which we have already referred, where such reference would have been reasonably expected. We accept that there is no statement on the part of the home owners as to how the document was said to have been provided to the builder and there are indications in the builder's statements to the Tribunal that he had been under the apprehension that the second Savage report was the first report provided by Mr Savage.
It is conceivable that the builder's affirmative response to the question "Have your read the reports [plural] of Dr Savage?" may have followed upon a failure to hear that the question was asked in respect of reports (plural) or to recognise the significance of the use of the plural, although we note that this reference followed clear exchanges about two reports from Mr Savage.
However, before we could be persuaded that the builder had been denied procedural fairness by not having received a copy of the first Savage report prior to the hearing, we would require persuasive evidence from the builder to that effect. No explanation was provided why the builder had not sworn an affidavit in support of his appeal, attesting to the fact (if it was the case) that he had not received a copy of the report or that he was not aware of the existence of that report during the course of the hearing and explaining the answers that he gave to the Senior Member about this.
Where a denial of procedural fairness is alleged in an appeal and the circumstances said to lead to that denial of procedural fairness are not apparent from the decision itself or from the record of the hearing below, it will generally be appropriate to lead evidence on the appeal to establish the circumstances said to have given rise to a breach of procedural fairness: see Waters v Waghorn [2016] NSWCATAP 247 at [30]-[32].
In the absence of evidence from the builder and no explanation why such evidence was not provided, we are unable to conclude from the material included in the appeal papers, including the transcript of the hearing, that the builder did not receive a copy of the first Savage report before the hearing.
As the builder has not established that he did not receive the report before the hearing, his argument that he was not accorded procedural fairness because he had not seen the report prior to the hearing cannot succeed and accordingly this ground of appeal must be dismissed.
It is not necessary in these circumstances to consider the question whether, if it were established that the builder had not received a copy of the first Savage report prior to the hearing, the builder had nevertheless been accorded procedural fairness either because he should reasonably have recognised that the home owners were relying upon two reports from Mr Savage and informed the Tribunal that he had not received a copy of the first report, or because, having failed to bring any documents to the hearing, he did not take the opportunity offered to him by the Senior Member (at page 28 of the transcript) to inspect the bundle of documents that the home owners were relying upon, which included the first Savage report and was subsequently admitted into evidence as Exhibit A1.
The obligation imposed upon the Tribunal by s 38(5) of the NCAT Act is: to take such measures as are reasonably practicable - (a) to ensure that the parties to the proceedings before it understand the nature of the proceedings, and (b) if requested to do so - to explain to the parties any aspect of the procedure of the Tribunal, or any decision or ruling made by the Tribunal, that relates to the proceedings, and (c) to ensure that the parties have a reasonable opportunity to be heard or otherwise have their submissions considered in the proceedings. [Emphasis added].
The home owners' submission that the builder had had a reasonable opportunity to be heard and to deal with the case brought against him, even if he had not been provided with a copy of the first Savage report, is not without substance. However, as we cannot be satisfied that the builder had not been provided with a copy of the report, we do not need to resolve that question.

Ground 2 - Jurisdiction - Were the defects found by the Senior Member "major defects"?

We note that there are two substantive requirements for defective building work to be classified as a "major defect": 1. The defect is in a "major element" of a building. 2. The defect has had or is likely to have one of the consequences set out in sub-paragraphs (a)(i) to (iii) in the definition of "major defect", that is: (i) the inability to inhabit or use the building (or part of the building) for its intended purpose; or (ii) the destruction of the building or any part of the building; or (iii) a threat of collapse of the building or any part of the building.
Although the builder's written submissions challenged the Senior Member's conclusion on both requirements, at the hearing of the appeal Mr Slattery withdrew any challenge to the Senior Member's finding that the defects found by the Senior Member were defects in a "major element" of the building. Mr Slattery acknowledged that the Senior Member had identified the inadequate piering referred to in Mr Savage's report as a load bearing element of the pool and essential to its stability.
Mr Slattery maintained, however, that there was no evidence to support the Senior Member's conclusions that the defect identified by the Senior Member had "caused the destruction of a part of the pool as it is responsible for a significant crack" and that it is "quite likely to cause the inability to use part of the pool for its intended purpose, as the crack (and associated damage to pavers) is likely to increase over time".
A finding made without evidence involves an error of law: Prendergast v Western Murray Irrigation at [13(7)].
Mr Slattery submitted that for the pool (or part of the pool) to have been "destroyed", so that the defects in its construction had resulted in its "destruction", required that the pool be rendered almost useless. Mr Slattery submitted that minor damage could not be said to constitute "destruction" within the meaning of that word in sub-paragraph (a)(ii) of the definition of "major defect" in s 18E(4).
In oral submissions, Mr Slattery referred to what he submitted was the evidence concerning the substantiality of the damage to the pool. In his submission, that was Mr Palazzi's oral evidence at p 37 of the transcript, where he stated that there was a crack in the corner of the pool going down from the top, which he variously described as going down 5cm (line 12) and 50cm (line 27). Mr Palazzi also gave evidence (line 31) that the pool was not leaking as the crack was above the water line. We note that this suggests that the reference to 50cm should have been to 50mm (ie 5cm).
Mr Slattery also noted that Mr Phillips' report referred to the crack as follows: "a crack ranging from approximately 0.1-2mm in width was noted at the top of the north-western corner of the pool shell, with the crack extending into the concrete edge. The crack was measured to extend down the pool shell by approximately 40mm."
Mr Slattery submitted that there was no explicit statement by either expert (ie Mr Phillips or Mr Savage) that the crack would continue to grow or render the pool unusable.
Mr Goldsmith, who appeared for the home owners, in his oral submissions identified the evidence which he submitted supported the Senior Member's finding at [86]. Mr Goldsmith referred to the "items of concern" identified by Mr Savage on pages 6 and 7 of his report. • The pool shell was not installed as designed, as a good proportion of the pool was located in uncontrolled filling that would not provide the level of lateral support that the designer would have envisaged for a fully in ground installation. That would have required controlled fill which requires a known material placed in a proscribed manner and compacted to a known density; a predictable material. The controlled fill is crucial for the stability of the pool and deck. • The pool shell was not founded on a common material i.e. rock at the deep end and soil at the other. This need not be of concern provided that any settlement does not render the skimmer box inoperable. We understand that the settlement of the pool has been towards the deep end and that the skimmer box is at the deep end. The settlement should be monitored with action taken when and if required. • The pool decking had failed. The pool deck was relying on piering, through uncontrolled fill, for support. In these circumstances it would be good engineering practice to provide a deck supported on bored piers founded in competent ground outside the zone of the influence of the filling, pool and adjacent retaining structure and a deck that could span between the piers. • With the failure of the piers the pool deck was relying on an adjacent retaining wall supporting uncontrolled fill for stability. The retaining wall was not designed for this role. Even with the best building practice, utilizing a controlled fill it would be unwise to assume that the retaining wall was capable of adequately supporting the slab without the need of piering or some other method of support for the slab within the zone of influence of the retaining wall. • The pool deck was relying on piering and/or the stabilised sand encasement for support immediately adjacent to the pool shell resulting in the cracking of the pool shell, coping beam and deck slab, at one location which indicates that the capacity of the coping beam was exceeded by the loads it attracted. The settlement noted is most probably due to buckling of the pool shell as it is unlikely that the shell had settled at base level as it is founded on rock. In our opinion the damage observed was due to poor or inadequate building techniques employed by the pool builder.
Mr Goldsmith placed particular significance on the statement that the controlled fill, which in Mr Savage's opinion should have been provided, was "crucial for the stability of the pool and deck". Mr Goldsmith submitted that that statement implied that the pool and deck will ultimately fail if not rectified.
Mr Goldsmith referred to Mr Savage's recommendations for rectification, which included: demolition of the deck slab; provision of controlled fill between the pool shell and retaining wall; installation of piering; and reconstruction of the deck slab, as also supporting a finding that, if not rectified, the pool was likely to cease to be usable.

Consideration - Ground 2

We have set out at [10] and [11] above the definitions of "major element" and "major defect".
We note that the term "building" (as used in the definitions of both "major defect" and "major element" in s 18E(4)) is not defined in the HBA. The term is defined in The Macquarie Dictionary as "anything built or constructed". In the Shorter Oxford English Dictionary, it is defined as "a thing which is built; a structure, an edifice".
Pursuant to clause 3 of Schedule 1 to the HBA, a swimming pool is included in the definition of "dwelling" if it is constructed for use in conjunction with a dwelling. We accept, and it does not appear to be controversial, that the swimming pool and its surrounds was a "building" for the purposes of s 18E.
In Stevenson v Ashton [2019] NSWCATAP 67 at [73] an Appeal Panel stated, in considering whether certain defects were "major defects": 73 The possible consequences of the defect, defined in subsections 18E(4)(a) (ii) and (iii) are at the high end of consequences, or impacts upon a building. The reference to "destruction of the building or any part of the building" does not connote a minor potential process of deterioration. The reasonably presumed legislative intention is that there must be evidence of a real possibility of destruction, not merely incidental damage or superficial deterioration. These elements also need to be established by probative evidence of what the impact has actually been, or what it probably will be. Evidence from the occupants or users of the building would be necessary to establish these elements of the claim.
In that decision, at [70], the Appeal Panel had cited the decision of a Senior Member of the Tribunal in Panchal v Jones t/as Oz Style Homes (unreported): 87. The defect does not need to be shown to make the habitation or use of the building (or part of it) impossible, but it must be such that the habitation or use of the building (or any part of it) cannot be for its intended purpose. 88. There are many instances in which water penetration into a building diminishes the amenity and use of the building. The impact of the defect and the extent of its interference with the intended use will vary. The definition suggests that the impact of a defect in the waterproofing upon the capacity to inhabit or use the building for its intended purpose must be shown to be significant. 89. In some respects the impact upon the capacity to inhabit or use the building will depend upon the magnitude of the problem.
That decision was the subject of an appeal which was dismissed (Jones t/as Oz Style Homes v Panchal [2018] NSWCATAP 238). No doubt was cast upon the passages set out above which were quoted in Stevenson v Ashton.
The decision of the Appeal Panel in Stevenson v Ashton was set aside on appeal to the Supreme Court: Ashton v Stevenson [2019] NSWSC 1689. In that decision, Harrison AsJ (at [74]) specifically found that the last sentence of paragraph [73] of the Appeal Panel's decision "cannot be correct", but her Honour made no criticism of the balance of that paragraph. At [76] Harrison AsJ explained her disagreement with the Appeal Panel as follows: 76. Nowhere in Vella [Vella v Mir [2019] NSWCATAP 28, a case referred to by the Appeal Panel] … , is it stated that a major defect must be "imminent or probable". Nor does s 18E(4) require any degree of imminence to the damage. Again, the Appeal Panel's statements seem to attach a sense of immediacy to major defects which is not otherwise required. Reading its reasons as a whole and fairly, it is my view that although at times the Appeal Panel does state the test in s 18E(4)(a) in its complete terms, the overall effect of its reasons is to seem to require that a major defect is one which is presently manifested and dire."
In assessing the Senior Member's findings and the evidence available to support those findings it is important to bear in mind exactly what the Senior Member determined. The entirety of the Senior Member's reasoning in relation to whether the defects he had found established constituted a major defect is set out in paragraphs [85] and [86] which we have set out at [12] above.
The Senior Member's conclusions may be restated as follows: 1. The relevant defect was cracking of the pool shell. 2. The pool shell was a major element because it was load bearing (bearing the weight of the water within it) and was essential to the stability of the core. 3. The piers constructed under the concrete slab forming the foundation of the pool deck were inadequate. 4. The slab and its piers are a load bearing component of the pool and are essential to its stability. 5. The defect, in a major element of the pool, has caused a destruction of part of the pool by causing a "significant crack". 6. The defect is likely to cause the inability to use part of the pool for its intended purpose as the crack was likely to increase over time.
It is apparent that the Senior Member in fact considered that there were two relevant defects, the cracking of the pool shell and the inadequate piering. It is also apparent that the cracking of the pool shell was not shown to be a defect in the work performed by the builder, but rather, on the Senior Member's findings, the consequence of the inadequate piering. It is the inadequate piering which is the relevant major element of the "building" constructed by the builder.
We agree with the submission of Mr Slattery that the existence of a 40 or 50mm crack in the corner of the pool does not constitute the "destruction" of the pool or a part of the pool. As the Appeal Panel noted in Stevenson v Ashton (at [73]), "'destruction of the building or any part of the building' does not connote a minor potential process of deterioration."
We note that Mr Savage's recommendations for rectification provided for the pool shell to be repaired rather than replaced. We consider that the crack, as described in the evidence, was not sufficiently substantial as to qualify as "destruction" of the pool or part of the pool within in the meaning of the definition of "major defect" in s 18E(4).
However, we do not accept Mr Slattery's submission that there was no evidence to support the Senior Member's conclusion that the crack was likely to increase over time.
There was ample evidence before the Tribunal, in the form of Mr Savage's reports, in particular the passages we have extracted at [75] above, that the pool and surrounding slab were inadequately supported and that that inadequate support had resulted in the cracking of the pool and the surrounding deck coping.
The conclusion, that if the inadequate support was not rectified the crack in the pool would be likely to continue to grow, was a fair and reasonable inference from that evidence. There was no suggestion that the pool shell was cracked prior to installation. Thus the crack must have been generated after the pool shell had been installed. There was no reason to conclude that the forces which had caused the crack would not continue to operate on the pool shell and cause the crack to lengthen.
That the pool would become unusable for its intended purpose, that is as a swimming pool, if the crack grew to the extent that it extended below the water line, is an obvious conclusion which required no further evidence.
Accordingly, we are not persuaded that there was an error of law in the Senior Member's conclusion that the defect for which the builder was responsible was a "major defect" in the sense that there was no evidence for that conclusion, nor are we persuaded that such conclusion was not reasonably open to the Tribunal.
Nor do we consider the Senior Member's conclusion to that effect was against the weight of evidence or not fair and equitable.
Accordingly, this ground of appeal must fail.
Our orders will be that leave to appeal should be refused and the appeal dismissed.
The order for payment made by the Senior Member was stayed by consent on 29 November 2019 until further order of the Tribunal. As the appeal is to be dismissed, the stay order should be lifted.

Costs

The home owners' written submissions sought costs in the event that the appeal was dismissed. As the amount in issue both in the proceedings before the Tribunal and in the appeal exceeded $30,000, by virtue of rules 38 and 38A of the Civil and Administrative Tribunal Rules 2014 (NSW), we are not required to find that there were special circumstances before we can make an award of costs.
The usual rule in relation to costs is that costs follow the event, and we are unaware of any reason why the usual rule should not apply in this case. However, we will give the parties an opportunity to file submissions seeking an alternative order. In the event no such submissions are filed our order will be that the Appellant pay the Respondent's costs as agreed or assessed.

Orders 1. Leave to appeal is refused. 2. The appeal is dismissed. 3. The stay of order 2 made on 23 October 2019 in proceedings HB 18/39023, granted by consent on 29 November 2019, is lifted. 4. Subject to orders (5) to (7) below, the appellant is to pay the respondents' costs of the appeal as agreed or assessed. 5. If either party seeks a different order in respect of the costs of the appeal they must file and serve written submissions identifying the order sought within 21 days of the publication of this decision. 6. If submissions are filed in accordance with order (5) the other party must file and serve submissions in reply within 21 days thereafter 7. Any submissions filed by the parties pursuant to orders (5) and (6) above should address the question whether the Appeal Panel may determine the issues raised on the papers and dispense with a hearing in relation to those issues.

I hereby certify that this is a true and accurate record of the reasons for decision of the Civil and Administrative Tribunal of New South Wales. Registrar DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated. Decision last updated: 11 June 2020

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